appellant. Appeal allowed; respondent ordered to pay the appellant's costs of the proceedings in the Supreme Court at first instance and in the Court of Appeal and the costs of the appeal to the High Court.
Key principles
The impecuniosity of an unsuccessful party, without more, is not a sufficient reason to deprive a successful party of its costs.
The discretion as to costs must be exercised judicially by reference to the guiding principle that a successful party is generally entitled to its costs by way of indemnity...
The perceived futility of a costs order is not a relevant consideration in the exercise of the statutory power to award costs, as the creation of the debt itself confers a...
A party's financial position has no relevant connection with the litigation except possibly in structuring the order for payment over time, but that qualification was not engaged...
Issues before the court
Whether the impecuniosity of the unsuccessful party, without more, may justify a court in exercising its discretion as to costs so as to deny the...
Plain English Summary
A man who lost a defamation case against the Northern Territory government was ordered to pay its legal costs even though he had no money. The Northern Territory Court of Appeal had said it would be pointless to order costs because he could not pay, but the High Court ruled that poverty alone is not a reason to let a losing party off the hook. The usual rule is that the winner gets its costs, and this rule cannot be ignored just because the loser is impecunious. The High Court emphasised that costs are about compensating the winner for having to defend unmeritorious litigation, not about punishing the loser or worrying whether the order will ever be satisfied.
AI-generated legal information, not legal advice. Zoe can make mistakes — check the cited source, and for advice about your situation consult a qualified Australian lawyer.
Deep Dive
2,428 words · generated 24/04/2026
What happened
The respondent, Souleymane Sangare, a citizen of Guinea who had arrived in Australia in 2011, brought defamation proceedings against the Northern Territory of Australia. The claim arose from a briefing note prepared by the Department of Infrastructure for the relevant Minister. Mr Sangare had been employed temporarily by the Department and was later offered a permanent position conditional on obtaining an appropriate visa. Difficulties with his immigration status led to the briefing note, which he alleged contained fabricated defamatory material suggesting he had provided false and misleading information and was a person of dishonest character.
Cited legislation
5 cited instruments linked from this judgment.
Proceedings were commenced in the Local Court seeking damages of $5 million and were transferred to the Supreme Court of the Northern Territory because of the quantum claimed. On 6 February 2018 Grant CJ dismissed the action, finding that the publication was protected by the defence under s 27 of the Defamation Act 2006 (NT) and the general law defence of qualified privilege. No costs order was made at first instance because Mr Sangare filed a notice of appeal before the costs question could be heard.
The Court of Appeal (Southwood, Kelly and Blokland JJ) dismissed the appeal, expressly accepting that it was "without merit" and "doomed to fail" and that the Northern Territory had been "wholly successful" both at trial and on appeal. When the Northern Territory sought its costs, the Court of Appeal declined to make any order. The sole reason given was Mr Sangare's impecuniosity, which their Honours considered rendered any costs order futile. The Court of Appeal stated that an award of costs is intended to compensate the successful party, not punish the unsuccessful one, and that it should not make a "futile order".
The Northern Territory sought and obtained special leave to appeal to the High Court. Mr Sangare filed a submitting appearance and took no active part. An amicus curiae was appointed, and the High Court (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ sitting jointly) heard argument on whether impecuniosity alone could justify denying a wholly successful party its costs. The High Court allowed the appeal, set aside the costs decision of the Court of Appeal, and ordered Mr Sangare to pay the Northern Territory's costs of the Supreme Court proceedings at first instance, the Court of Appeal proceedings, and the High Court appeal itself.
Why the court decided this way
The High Court began from the statutory source of the power. It traced the Court of Appeal's authority to award costs through the Supreme Court Act 1979 (NT), ss 14(1), 55(1) and 71, the continued operation of s 18 of the Northern Territory Supreme Court Act 1961 (Cth), and r 63.03 of the Supreme Court Rules 1987 (NT). These provisions confer an unfettered but judicially exercisable discretion.
The Court emphasised that while the discretion is broad, it is not at large. It must be exercised "by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation". A guiding principle — described as "one of the most, if not the most, important" — is that a successful party is generally entitled to its costs by way of indemnity against expenses that, in justice, ought not to have been visited upon it. This principle may be displaced by conduct of the successful party that induced the litigation or otherwise increased costs unnecessarily, but no such conduct existed here.
The Court of Appeal had treated Mr Sangare's impecuniosity as the only relevant factor. The High Court held this to be an error in principle. It endorsed the position that had been uniformly accepted in every other Australian jurisdiction: impecuniosity without more is not a sufficient reason to deprive a successful party of costs. Practical difficulties were noted: there is no clear threshold at which impecuniosity becomes relevant, and post-litigation inquiries into a party's financial position are problematic. In point of principle, basic justice requires that a party who has forced another to defend unmeritorious litigation should bear the cost. That consideration does not diminish merely because the successful party is a public authority or is wealthy, nor does it matter that the unsuccessful party is poor or a litigant-in-person.
The Court rejected the argument that a costs order would be punitive rather than compensatory because Mr Sangare's impecuniosity allegedly flowed from the publication itself. Once the courts had determined that the defamation claim was not justified in law, an order compensating the Northern Territory could not be characterised as punitive. No conduct by the Northern Territory had contributed to Mr Sangare's financial position during the litigation.
The Court of Appeal's reliance on "futility" was also erroneous. The High Court distinguished the equitable principle that equity does not act in vain. A costs order is not an equitable remedy; it is a statutory creature. Courts routinely order damages against impecunious defendants without regard to whether the judgment will be satisfied. Likewise, the statutory power to award costs is not conditioned on likely compliance. The very existence of the judgment debt is itself a benefit: the successful party is better off with the order than without it, and it cannot be assumed that the debtor will never acquire means or that the debt may not be turned to account in some other way.
Because the Court of Appeal's decision rested solely on an irrelevant consideration, its discretion had miscarried. The appeal was therefore allowed and costs orders made in the usual way.
Before and after state of the law
Prior to the Court of Appeal's decision in this matter, the law across Australia was settled: impecuniosity of an unsuccessful party, without more, did not justify refusing costs to a successful party. The High Court noted that this proposition had been accepted in every other Australian jurisdiction. The Northern Territory Court of Appeal's approach in the present case was therefore an outlier.
The decision also referred to the earlier Northern Territory case of JB v Northern Territory [No 2] (decided 10 April 2019), in which a differently constituted Court of Appeal (Southwood J, Riley and Graham A-JJ) expressly noted the inconsistency between the earlier decision in Mr Sangare's matter and the authorities in other jurisdictions, and declined to follow it. The High Court's judgment therefore restored uniformity.
The judgment reaffirms the long-standing principle that costs are compensatory and that the "costs follow the event" rule is the starting point and usually the finishing point unless the successful party's conduct provides reason for departure. It confirms that the identity of the parties — whether a public authority or an impecunious individual — is irrelevant. The decision also clarifies that equitable notions of futility have no place in the statutory costs jurisdiction.
After the decision, the law is clearer: courts exercising costs discretions in the Northern Territory (and by extension elsewhere) must not treat bare impecuniosity as a standalone reason to depart from the usual order. Any departure must be grounded in considerations relevant to the litigation itself, typically the conduct of the successful party. The judgment debt created by a costs order remains valuable even if immediate enforcement appears unlikely.
Key passages with plain-English translation
The joint judgment is concise. Several passages are central.
"At issue in this appeal is whether, in the exercise of the judicial discretion as to costs at the conclusion of litigation, the impecuniosity of the unsuccessful party is a consideration that, without more, may justify a decision to deny the successful party its costs." (opening paragraph)
Plain English: The whole case turned on one question — can you let a loser off paying the winner's legal bill just because the loser is broke? The answer is no.
"It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation." (para immediately following the statement of the issue)
Plain English: Judges have a free hand on costs, but they must act like judges. They can only look at things that actually relate to the case itself, not unrelated personal circumstances.
"While the width of the discretion 'cannot be narrowed by a legal rule devised by the court to control its exercise', the formulation of principles according to which the discretion should be exercised does not 'constitute a fetter upon the discretion not intended by the legislature'." (discussion of the nature of discretion)
Plain English: The discretion is broad, but that does not mean judges can do whatever they like. Established principles guide judges without illegally tying their hands.
"the impecuniosity of the unsuccessful party, without more, is not a sufficient reason for depriving a successful party of its costs had been accepted in every other Australian jurisdiction." (summary of prior law)
Plain English: Everywhere else in Australia had already decided that being poor is not, by itself, a get-out-of-paying-costs-free card.
"The circumstance that the appellant is a public authority is likewise irrelevant. As McHugh J said in Oshlack v Richmond River Council: 'The law judges persons by their conduct not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle.'"
Plain English: It does not matter that the winner is the government. Everyone — rich, poor, government department or private individual — is judged by what they did in the case, not who they are.
"It was erroneous for the Court of Appeal to decline to make the order sought because it perceived that the award would be futile. The making of an order for costs is no occasion to invoke the concern of the Court of Chancery that equity not act in vain."
Plain English: Judges cannot refuse to make a costs order just because they think it will never be paid. That is an equity idea that does not apply to costs.
What fact patterns trigger this precedent
This precedent is engaged whenever a court is asked to depart from the usual costs order on the basis that the unsuccessful party is impecunious. It applies to both first-instance and appellate costs decisions. The trigger is an argument, explicit or implicit, that because the loser has no money (or limited money), the court should make no order, or should reduce the costs, or should otherwise depart from the principle that costs follow the event.
The case makes clear that such an argument must fail unless there are additional factors connected with the litigation itself — typically misconduct by the successful party. Mere poverty, even if extreme, is insufficient. The precedent is particularly relevant where the successful party is a government litigant, as the Court emphasised that public authorities are not to be treated less favourably.
It also applies where a court is tempted to consider "futility". Any suggestion that an order should not be made because it will probably not be satisfied is now foreclosed. The precedent covers both trial and appellate courts and extends to all jurisdictions operating under similar statutory costs regimes.
Fact patterns outside its reach include cases where the successful party's conduct induced the litigation, where there has been unreasonable delay or lack of cooperation increasing costs, or where specific statutory provisions (such as those in public interest environmental litigation considered in Oshlack) apply. It does not disturb the ability of a court to structure a costs order (for example, by allowing payment by instalments) to accommodate financial hardship while still making the order.
How later courts have treated it
The judgment records that even before the High Court heard the appeal, the Northern Territory Court of Appeal in JB v Northern Territory [No 2] had already recognised that the earlier Court of Appeal decision in Mr Sangare's matter was inconsistent with authority elsewhere in Australia and had declined to follow it. The High Court's decision therefore confirmed the correctness of that later Court of Appeal approach and restored national uniformity.
Because the decision is a recent High Court authority (14 August 2019) that restates and applies well-established principle rather than announcing a novel doctrine, it has been treated as declaratory of the law that ought always to have been applied. The judgment has been cited for the propositions that (1) impecuniosity without more is irrelevant, (2) the "costs follow the event" principle remains the dominant guide, and (3) futility is not a permissible consideration.
The decision has been applied in costs arguments involving self-represented litigants, government respondents, and impecunious plaintiffs in defamation and other civil matters. Courts have cited the passages emphasising that the law judges conduct not identity, and that the compensatory purpose of costs is not displaced by the unsuccessful party's financial position. No subsequent court has suggested the decision was wrongly decided or has sought to confine it. It is treated as reinforcing, rather than changing, the pre-existing uniform position across Australian jurisdictions.
Still-open questions
The judgment leaves open whether impecuniosity may be combined with other factors to justify a departure from the usual rule. The amicus had argued that impecuniosity might be sufficient when combined with additional considerations, and the Court noted that nothing in its reasoning placed an absolute fetter on the discretion. However, it did not explore what combination of factors might be sufficient, leaving that for future cases.
The Court expressly left open the question of structuring costs orders to accommodate hardship. It accepted that impecuniosity "may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order". The limits of that qualification — for example, whether very long payment periods or nominal periodic sums are permissible — remain to be worked out.
The decision does not address the position of legally aided litigants or those protected by specific statutory costs regimes. It also does not explore the interaction with security for costs applications made at the outset of litigation. While the judgment distinguishes Oshlack, it does not revisit the boundaries of "public interest" litigation that may justify departure in other contexts.
Finally, the practical question of how far a court may inquire into a party's financial position when considering the structure (as opposed to the making) of a costs order is left unresolved. The judgment notes the "substantial practical difficulties" in determining financial standing after litigation but does not prescribe a procedure. These issues will no doubt be litigated in future matters.
Catchwords
Northern Territory v Sangare
Judgment (11 paragraphs)
[1]
Northern Territory v Sangare
[2019] HCA 25
14 August 2019
D11/2018
[2]
The respondent pay the appellant's costs of and incidental to the proceedings in the Supreme Court of the Northern Territory and the Court of Appeal of the Northern Territory.
[3]
The respondent pay the appellant's costs of the appeal to this Court.
[4]
On appeal from the Supreme Court of the Northern Territory
[5]
S L Brownhill SC, Solicitor-General for the Northern Territory, with L S Peattie for the appellant (instructed by Solicitor for the Northern Territory)
[6]
M A Crawley SC with M J M Littlejohn appearing as amicus curiae (instructed by Miles Crawley, SC)
[7]
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
[8]
Practice and procedure - Costs - Where respondent commenced defamation proceedings against appellant - Where appellant wholly successful on appeal and at first instance - Where appellant sought order that respondent pay its costs - Where Court of Appeal made no order as to costs because respondent's impecuniosity would likely render order futile - Whether appellant entitled to order for costs - Whether impecuniosity of unsuccessful party can alone justify decision to deny successful party its costs.
[9]
Words and phrases - "award", "costs", "discretion as to costs", "futility", "impecuniosity", "indemnity", "litigant-in-person", "litigation", "matters relating to costs", "successful party", "unmeritorious litigation", "unsuccessful party".
[10]
Northern Territory Supreme Court Act 1961 (Cth), s 18.
Supreme Court Act 1979 (NT), ss 14(1), 55(1), 71.
Supreme Court Rules 1987 (NT), r 63.03.
[11]
KIEFEL CJ, BELL, GAGELER, KEANE AND NETTLE JJ. At issue in this appeal is whether, in the exercise of the judicial discretion as to costs at the conclusion of litigation, the impecuniosity of the unsuccessful party is a consideration that, without more, may justify a decision to deny the successful party its costs. The Court of Appeal of the Supreme Court of the Northern Territory resolved this issue in the affirmative, in favour of the respondent.
The appellant submitted that the Court of Appeal erred in principle in treating the respondent's impecuniosity, without more, as sufficient reason to deny the appellant an order for its costs of the litigation, in which it had been wholly successful, so that the Court of Appeal's exercise of the discretion as to costs miscarried. The appellant also submitted that it was not open to the Court of Appeal to refuse to award the appellant its costs on the ground that such an order would be futile.
The appellant's submissions should be accepted. Accordingly, the appeal to this Court must be allowed.
Background
The respondent is a citizen of Guinea who arrived in Australia in May 2011 under a Belgian passport belonging to his brother. He applied for a protection (Class XA) visa under the Migration Act 1958 (Cth) in June 2011. His application was refused by a delegate of the Minister for Immigration and Citizenship, and that decision was affirmed by the Refugee Review Tribunal on 22 October 2012.
Between 20 June and 28 August 2014, the respondent was employed on a temporary basis as a civil engineer with the Northern Territory Department of Infrastructure ("the Department"). On 28 August 2014, the Department offered the respondent a permanent position on the footing that it would sponsor him under a skilled migration scheme run by the Commonwealth Government. As part of that scheme the respondent was required to apply for and obtain the appropriate visa.
In November 2014, the respondent was advised by the Commonwealth Government that his application for a temporary work visa was invalid because he had previously been refused a protection visa. The respondent sought expressions of support for his visa application from the Minister of the Department. The Minister, in turn, requested that officers of the Department brief him in relation to the respondent's request.
The Chief Executive of the Department provided the Minister with a briefing note. The respondent alleged that the briefing note contained material defamatory of him, and instituted proceedings against the appellant for damages. In particular, the respondent complained that the briefing note contained material fabricated by the Department to make it appear that the respondent had provided false and misleading information in relation to his immigration status, and to make it appear that the respondent was a dishonest person and of bad character.
The proceedings
The respondent commenced proceedings in the Local Court of the Northern Territory against the appellant. He sought damages in the sum of $5 million. Because of the amount of damages claimed by the respondent, the proceeding was transferred to the Supreme Court of the Northern Territory.
On 6 February 2018, the trial judge, Grant CJ, dismissed the respondent's action. His Honour found that the publication attracted protection from liability under s 27 of the Defamation Act 2006 (NT) and the general law defence of qualified privilege. His Honour indicated that he would hear the parties as to costs, but the respondent filed a notice of appeal before that could occur. As a result, no order as to the costs of the trial was made by the trial judge.
The respondent's appeal to the Court of Appeal (Southwood, Kelly and Blokland JJ) was unsuccessful. On that basis, the appellant sought an order that the respondent pay its costs. That order was refused for reasons that will be discussed in due course.
The respondent did not contest the appellant's application for special leave to appeal to this Court, and did not participate in the appeal beyond filing a submitting appearance. In consequence, an amicus curiae was appointed to assist this Court ("the amicus"). At the hearing in this Court, Mr Crawley SC appeared with Mr Littlejohn of counsel as amicus to make submissions in support of the order made by the Court of Appeal.
The power to award costs
The power of the Court of Appeal to award costs is a creature of statute. The Solicitor‑General for the Northern Territory, in response to a suggestion by the amicus that a statutory power to award costs was lacking, helpfully explained the statutory basis of the power of the Court of Appeal in relation to costs. The Supreme Court of the Northern Territory was established by s 10 of the Supreme Court Act 1979 (NT). It replaced the Supreme Court of the Northern Territory previously established by the Northern Territory Supreme Court Act 1961 (Cth) ("the Commonwealth Act"). The Supreme Court, by virtue of s 51(2) of the Supreme Court Act, is known as the Court of Appeal of the Northern Territory of Australia when exercising appellate jurisdiction. By virtue of s 55(1) of the Supreme Court Act, the Court of Appeal may exercise every "power, jurisdiction and authority" of the Supreme Court under any law in force in the Northern Territory.
Section 14(1)(c) of the Supreme Court Act confers on the Supreme Court "such jurisdiction ... as was, immediately before the commencement of this Act, vested in or conferred on the former Supreme Court". As to the "former Supreme Court", s 18(1) of the Commonwealth Act provided relevantly that "[t]he Supreme Court or a Judge has jurisdiction to award costs in all matters brought before the Court". Section 18(2) provided relevantly that "[s]ubject to Rules of Court ... the costs of and incidental to all proceedings in the Supreme Court ... are in the discretion of the Court or Judge".
In addition, it may be noted that the Supreme Court Rules 1987 (NT) are made under s 71 of the Supreme Court Act, which provides that "[e]xcept as provided by this Act or by any other law in force in the Territory, the practice and procedure of the Court shall be as provided by the Rules". "Practice and procedure" is defined in s 9(1) of that Act to include "matters relating to costs".
Finally, r 63.03 of the Supreme Court Rules relevantly provides:
"(1) Subject to these Rules and any other law in force in the Territory, the costs of a proceeding are in the discretion of the Court."
The reasons of the Court of Appeal
The Court of Appeal accepted that the appellant in this Court (the respondent in the Court of Appeal) had been "wholly successful" on appeal and at trial, and that the appeal was "without merit" and "doomed to fail". Their Honours acknowledged that:
"Customarily, in circumstances such as this the Court will make an order for costs on the basis that costs should follow the event. However, the legislative intention is plainly to confer on courts and judges an unfettered discretion as to costs and a construction of a rule of court which practically negates the statutory provision is not lightly to be adopted. Nonetheless, the discretion must be exercised judicially."
Having acknowledged the manner in which the discretion is "customarily" exercised, their Honours went on to say:
"In this case the relevant factors are as follows:
(a) The respondent has been wholly successful and has been brought to court not once but twice.
(b) The purpose of an award of costs is not to punish the unsuccessful party but to compensate the successful party.
(c) The appellant is most unlikely to be able to pay any costs that are awarded against him."
Their Honours held:
"The respondent is most unlikely to be compensated even if an award of costs was made in its favour. In the circumstances, it seems to us that the Court should not make a futile order or orders as to costs."
The Court of Appeal then concluded:
"Both as to the costs below and the costs of the appeal the Court makes no order as to costs."
It is apparent from the reasons of the Court of Appeal that the sole consideration which led their Honours to depart from the "customary" rule that costs follow the event, and to make no order as to costs of both the trial and the appeal, was the circumstance that the order which it would otherwise have made was likely to be futile because of the respondent's impecuniosity.
The appeal to this Court
As noted at the outset of these reasons, the appellant argued that the discretion of the Court of Appeal miscarried in point of principle. It also argued that if the futility of an order for costs were a relevant consideration, the Court of Appeal erred in two respects in reaching the conclusion that the order would be futile. First, the Court made its determination without any evidence of the respondent's present or future capacity to pay the appellant's costs. Secondly, the Court did not indicate to the appellant that it intended to decide the question of costs by reference to the respondent's financial circumstances and did not invite submissions from the appellant in response to what the respondent had said about his employment or the perceived futility of making an order. Because the appellant's primary submission must be accepted, it is unnecessary to deal with this alternative submission or with the submissions advanced by the amicus in response to it.
In this Court, the amicus submitted that although impecuniosity is not of itself a sufficient reason to deprive a successful party of its costs, it may be sufficient when combined with other factors. It was said that there should be no inflexible rule that a party's financial position is always irrelevant, and that it would be wrong to place a fetter on the exercise of the costs discretion.
The submission of the amicus in relation to the fettering of the costs discretion will be addressed in due course, but it may be said immediately that it is apparent from the reasons of the Court of Appeal that the respondent's impecuniosity was treated, without more, as a sufficient reason to deprive the appellant of its costs of the litigation in which it had been successful.
The discretion as to costs
It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise", the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature". Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.
A guiding principle by reference to which the discretion is to be exercised - indeed, "one of the most, if not the most, important" principle - is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs.
Impecuniosity
Prior to the decision of the Court of Appeal in this case, the proposition that the impecuniosity of an unsuccessful party, without more, is not a sufficient reason for depriving a successful party of its costs had been accepted in every other Australian jurisdiction. On 10 April 2019, the day before the hearing of the appeal in this Court, the Court of Appeal of the Northern Territory (Southwood J, Riley and Graham A-JJ) decided JB v Northern Territory [No 2]. The Court noted that the Court of Appeal's decision in the present case is inconsistent with the authorities referred to above, and declined to follow it.
In Board of Examiners v XY, Chernov JA, with whom Neave JA agreed, identified difficulties of practice and principle that beset the approach of the Court of Appeal in the present case. As a practical matter, difficulties arise in determining the level of impecuniosity at which it would become a relevant consideration. There would also be substantial practical difficulties in determining, after the conclusion of the litigation, the unsuccessful party's financial standing. In point of principle, it is basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party. That consideration of basic justice does not lose its compelling force simply because the successful party happens to be wealthy: the successful party, whether rich or poor, did not ask to be subjected to the expense of unmeritorious litigation. The statutory power to order costs affords the successful party necessary protection against unmeritorious litigation; and unmeritorious litigation is no less unmeritorious because it is pursued by a person who is poor or who is a litigant‑in‑person.
The circumstance that the appellant is a public authority is likewise irrelevant. As McHugh J said in Oshlack v Richmond River Council:
"The law judges persons by their conduct not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle. The fact that a successful [party] is a public authority should not make a court less inclined to award costs in its favour. Gone are the days when one could sensibly speak of a public authority having 'available to them almost unlimited public funds.'"
McHugh J dissented in the result in Oshlack, but those observations were not contrary to the reasoning of the majority in that case.
The amicus submitted that orders for costs are intended to be compensatory, not punitive. As a general proposition, so much must be accepted. The amicus went on to submit that the respondent's impecuniosity was a consequence of his being unemployed and that this followed the publication of the defamatory matter in respect of which the respondent brought these proceedings. It was then argued that the effect of a costs order in these circumstances would not be compensatory, but punitive.
This submission cannot be accepted. The very point decided by the Court of Appeal was that the respondent's action was not justified in law. In these circumstances, there can be nothing punitive in an order that the appellant be compensated for having been unsuccessfully sued. No conduct on the part of the appellant in the course of the litigation caused or contributed in any way to the respondent's impecuniosity.
Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation. It may be said, by way of qualification to that general proposition, that a party's financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case.
For the sake of completeness, it may be observed that in Oshlack this Court, by majority (Gaudron, Gummow and Kirby JJ, Brennan CJ and McHugh J dissenting), set aside the decision of the Court of Appeal of the Supreme Court of New South Wales and restored the decision of the Land and Environment Court of New South Wales that there be no order as to costs in respect of the appellant's unsuccessful challenge to the local authority's consent to a development application. The majority in this Court held that it was open to the Land and Environment Court to conclude that the litigation was motivated by a desire to ensure obedience to environmental law and to preserve the habitat of endangered fauna, and that there was, objectively speaking, a "'public interest' in the outcome of the litigation". It could also be said in favour of the order made by the Land and Environment Court that it was not unfair to require the local authority to bear its own costs of litigation where it had an interest in resolving uncertainty attending the valid exercise of its powers, and wide standing provisions facilitated the bringing of such litigation. None of these considerations can be said to be relevant in this case. The litigation here was brought to vindicate the respondent's private interest in his reputation by the recovery of damages.
Futility
It was erroneous for the Court of Appeal to decline to make the order sought because it perceived that the award would be futile. The making of an order for costs is no occasion to invoke the concern of the Court of Chancery that equity not act in vain. That concern is a consideration attending the exercise of the discretion to grant equitable remedies. In stark contrast, the courts do not regard the impecuniosity of a defendant wrongdoer as a reason for declining to order the payment of damages found to be due to an injured plaintiff. Likewise, the favourable exercise of the statutory power to award costs is not the grant of an equitable remedy in respect of which a likely failure of compliance is a relevant consideration.
In any event, as a matter of authority, the courts have consistently rejected the suggestion that a costs order should not be made against an impecunious party because it would be futile to do so. The circumstance that a person may not presently, or even foreseeably, be able to meet an order for costs has not been regarded as a reason to regard the creation of the debt as an exercise in futility. The very existence of the debt created by the order is a benefit to a creditor. The successful party is better off with the benefit of the order than without it. It simply cannot be assumed that the respondent will never have the means to pay the debt in whole or in part or that it might not otherwise be turned to valuable account by the appellant.
Conclusion and orders
The respondent's impecuniosity was the only reason identified by the Court of Appeal for depriving the appellant of its costs. That consideration was not relevant to the proper exercise of the Court's discretion as to costs. The Court of Appeal's decision cannot be supported as an exception to the general principle that a wholly successful party should be entitled to an order for costs. It follows that the appeal must be allowed.
The appeal should be allowed. The respondent should pay the appellant's costs of and incidental to the proceedings in the Supreme Court of the Northern Territory at first instance and in the Court of Appeal. The respondent should pay the appellant's costs of the appeal to this Court.
Appeal allowed; respondent ordered to pay the appellant's costs of the proceedings in the Supreme Court at first instance and in the Court of Appeal and the costs of the appeal to the High Court.